The European Parliament and the Council have adopted the new directive on insurance distribution (no. 2016/97, published in the EU Official Journal on 2 February 2016).
Member States must transpose the directive by 23 February 2018.
The new directive, which lays down rules concerning the taking-up and pursuit of the activities of insurance and reinsurance distribution in the European Union, is mainly intended to:
- introduce some amendments to the provisions of Directive 2002/92/EC in view of the changed regulatory and economic framework;
- ensure a minimum harmonization of the laws of the various European countries, without precluding Member States from maintaining or introducing more stringent provisions in order to protect customers.
The directive consists of 46 articles.
The main changes include the following:
- (Article 2) a broader definition of insurance distribution, which also includes "the provision of information concerning one or more insurance contracts in accordance with criteria selected by customers through a website or other media and the compilation of an insurance product ranking list, including price and product comparison, or a discount on the price of an insurance contract, when the customer is able to directly or indirectly conclude an insurance contract using a website or other media".
- (Article 3) the obligation to register also for intermediaries who take-up and pursue the activity of insurance or reinsurance distribution in an ancillary capacity with respect to their core business;
- (Article 10) the extension of the obligation to hold professional indemnity insurance to include also ancillary insurance intermediaries;
- (Article 17) the prohibition to make any arrangement by way of remuneration, sales targets or otherwise that could provide an incentive to the intermediary or its employees to recommend a particular insurance product to a customer when the intermediary could offer a different insurance product which would better meet the customer's needs.
- (Article 19) the obligation of the intermediary to provide the customer, in good time before the conclusion of an insurance contract (regardless of whether it is a life insurance or damage coverage policy), with information on the nature of the remuneration received;
- (Article 25) the obligation of insurance undertakings and intermediaries "which develop any insurance product" to maintain, operate and review a process for the approval of each insurance product and of any subsequent adaptations before it is marketed or distributed to customers, as well as the obligation to regularly review the insurance products in order to assess whether said product remains consistent with the needs of the identified target market.
Specific provisions have also been introduced concerning insurance-based investment products.